Chevron posts huge 2nd-quarter profit
David R. Baker, Chronicle Staff Writer
Saturday, July 31, 2010
Chevron Corp. on Friday joined the parade of oil giants posting big second-quarter profits, as rising petroleum prices lifted the company's net income to $5.41 billion, or $2.70 per share.
That more than triples the $1.75 billion profit Chevron, based in San Ramon, earned in the second quarter of 2009, when the global economy was just starting to climb out of the recession.
With the exception of BP, all of the big international oil companies are seeing their fortunes surge. Exxon Mobil Corp.'s second quarter profit rose 91 percent to $7.56 billion, while ConocoPhillips earnings jumped 385 percent to reach $4.16 billion.
Borne higher by rising worldwide demand, oil prices have spent the first half of 2010 at levels that would have seemed stunning just a few years ago, falling below $70 per barrel only for a handful of days in May. Crude oil sold on the New York Mercantile Exchange closed Friday at $78.95.
"Oil prices are in a sweet spot where it's profitable for companies to invest, earn a reasonable return and not price consumers out of the market," said Michael Cuggino, president of the Permanent Portfolio Family of Funds in San Francisco, which owns about 500,000 Chevron shares.
As a result, Chevron made more money in the first six months of 2010 - $9.96 billion - than it did in all of 2003, when the company's annual profit hit $7.2 billion.
Chevron fetched an average domestic sale price of $71 per barrel of oil or natural gas liquids in this year's second quarter, compared with $50 a year ago. The company's revenue in the most recent quarter surged to $53 billion, up from $40.2 billion in the same period of 2009.
Chevron even saw a big jump in profits from its refining and marketing operations, which had been faring so badly that the company cut 2,000 jobs from that division this year. The company's "downstream" operations in the United States made a $433 million profit in the second quarter, compared with a $51 million loss during the same three months of 2009.
"We had another very successful quarter, both operationally and financially," said Chevron Chief Executive Officer John Watson.
The massive BP oil spill that has riveted the nation since April did not shut down any of Chevron's oil production in the Gulf of Mexico, the company reported Friday. Indeed, the company's production of oil and natural gas rose both in the United States and around the globe during the second quarter, reaching 2.75 million barrels per day worldwide.
But the spill has affected Chevron's hunt for more oil in the gulf. George Kirkland, the company's executive vice president in charge of exploration and drilling, said the federal drilling moratorium triggered by the spill had suspended drilling at two of Chevron's offshore oil fields and will delay exploratory drilling at two other sites.
He called for lifting the moratorium and said that Chevron supports tightening standards for how offshore wells are drilled.
"We believe the investigations of this tragedy will show that it was preventable," Kirkland said. "Our confidence is very high in being able to drill these wells safely, just like we've drilled hundreds of other deepwater wells."
E-mail David R. Baker at email@example.com.
Chevron 2Q income triples on higher energy prices
By CHRIS KAHN, AP Energy Writer
Friday, July 30, 2010
(07-30) 13:16 PDT New York (AP) --
Chevron's second-quarter earnings tripled on better refining margins and higher prices for oil and natural gas, the company said Friday.
The results easily beat most Wall Street expectations. The San Ramon, Calif., company is the latest oil major to report big gains in the second quarter as demand for oil and gasoline has pushed prices higher. Exxon Mobil Corp. posted income of $7.56 billion in the quarter, its best result since the last three months of 2008. Royal Dutch Shell Group boosted second-quarter earnings 15 percent, and ConocoPhillips said profits nearly tripled in the April-June period.
Chevron Corp. reported net income of $5.4 billion, or $2.70 per share, for the three months ended June 30. That compares with $1.7 billion, or 87 cents per share, in the same part of last year. Revenue jumped 32 percent to $53 billion.
Among oil giants, BP PLC has been the only one to disappoint as it continues to reel from the massive oil spill in the Gulf of Mexico. The British company this week reported a record $17 billion quarterly loss as it set aside $32.2 billion to pay for the widening environmental calamity in the Gulf.
BP's runaway well, which pumped as much as 184 million gallons of oil into the sea, has tainted the entire oil industry. Market values slumped for Big Oil as President Obama temporarily closed U.S. waters to deep-sea oil exploration.
The moratorium, which could be lifted after Nov. 30, forced service companies and rig owners to move staff and equipment onshore and out of the Gulf.
Chevron said it has halted two exploratory wells in the Gulf. Plans for two more deepwater exploration wells also have been delayed. The company loaned one of its rigs to BP to help with the spill response, and the other two have been sitting idle.
George Kirkland, Chevron's vice president of global upstream and gas, said the company remains committed to exploring oil and gas in the Gulf. He told investors in a conference call that the company expects a variety of drilling projects to resume later this year "assuming the moratorium is lifted."
Oil stocks declined this summer as the BP spill expanded in the Gulf. Chevron's stock has been making a comeback in recent weeks, though it's still about 7 percent lower since the April 20 rig explosion.
Fadel Gheit, an analyst with Oppenheimer & Co., said investors remain concerned that oil refineries will be able to maintain profits like they have this quarter. Gasoline prices tend to rise during the second quarter as an influx of summer tourists hit the roads. Afterward, refineries could continue to struggle, Gheit said.
Chevron shares also have taken a hit as investors worry about the company's ability to increase production.
"Chevron has one of the largest holdings of oil leases in the Gulf of Mexico," Gheit said. "So they could see a big future impact" if the U.S. extends its drilling ban. Chevron's oil production should fall slightly this year because of the ban, slicing less than 10,000 barrels a day from the overall operation, Chevron's Kirkland said.
Current oil and gas production wasn't targeted by the ban, however, and in the second quarter oil majors reaped billions of dollars in profits from drilling operations around the world.
As the U.S. and other countries pull themselves from recession, world demand for petroleum products has been on the rise. Oil prices jumped 31 percent and natural gas prices rose 14 percent in the quarter. Retail gasoline prices also increased 20 percent to an average of $2.86 per gallon in the second quarter, according to data from the Energy Information Administration.
Oil companies cranked up production to take advantage. Chevron increased oil and gas production 3 percent to 2.04 million barrels per day.
The refining business also rebounded from a woeful 2009, when companies struggled to pass higher oil prices along at the pump. A rise in consumer demand pushed profit margins higher for refineries. During the quarter, Chevron's downstream business, which includes refineries, reported earnings of $975 million, up from $131 million in the year-ago period.
Shares rose 19 cents to close Friday trading at $76.21.
Chevron Profit Triples After Energy Demand Increases
Friday, July 30, 2010
(Updates share price in seventh paragraph.)
July 30 (Bloomberg) -- Chevron Corp., the second-biggest U.S. oil company, said profit tripled, exceeding analysts' estimates, after recovering demand for petroleum-based fuels lifted energy prices.
Second-quarter net income jumped to $5.41 billion, or $2.70 a share, from $1.75 billion, or 87 cents, a year earlier, San Ramon, California-based Chevron said today in a statement. Per- share profit was 24 cents higher than the average of 18 analysts' estimates compiled by Bloomberg.
Chevron follows Exxon Mobil Corp. and ConocoPhillips in reporting surges in earnings this week after recovering economies around the world boosted demand for diesel and other fuels. Refining earnings at Chevron jumped more than sevenfold to $975 million. U.S. oil futures averaged $78.05 a barrel in the quarter, up 31 percent from a year earlier.
"It's a common theme this quarter of riding higher commodity prices and improved refining and chemical margins," said Brian Youngberg, an analyst at Edward Jones in St. Louis who has a "buy" rating on Chevron shares and doesn't own any. "I think the company continues to have a good outlook going forward."
Revenue climbed 32 percent to $53 billion, Chevron said. Oil and natural-gas production rose 2.8 percent to the equivalent of 2.75 million barrels of crude a day.
Worldwide demand for oil in the second quarter increased an estimated 3.2 percent from a year earlier, according to the International Energy Agency in Paris.
Chevron rose 19 cents to $76.21 as of the 4 p.m. close of New York Stock Exchange composite trading. The stock, which has 18 buy and 8 hold ratings from analysts, has climbed 13 percent in the past year.
Chevron Chief Executive Officer John Watson aims to boost oil and gas production with wells in places such as the Gulf of Mexico and Australia. The industry is coping with a moratorium on new deep-water drilling permits in the U.S. Gulf following an explosion April 20 at BP Plc's Macondo well, which killed 11 workers and caused the biggest oil spill in U.S. history.
Exxon Mobil, the biggest U.S. oil company, said yesterday that its second-quarter net income jumped 91 percent to $7.56 billion. ConocoPhillips, the No. 3 U.S. energy producer, said July 28 that its profit jumped almost fivefold to $4.16 billion.
--Editors: Tony Cox, Tina Davis.